Supply Ecosystems: Co-opetition – Where Cooperation and Competition Meet

We recently shared some thoughts around the premise of an article that will soon be published in the Journal of Business Logistics authored by Penn State’s Christopher Craighead, Auburn University’s David Ketchum and the University of Tennessee’s Russell Crook that argues why a new type of supply ecosystem will replace current sourcing and supply chain models. One of the arguments the authors make is that in this new model, rising levels of co-opetition will take place within supply ecosystems. Specifically, in this regard, “Organizations within the ecosystem are independent, but they also are interdependent as they need to both cooperate with one another and compete for limited resources such as profits. The intersection of cooperation and competition is referred to as ‘co-opetition’.”

Co-opetition does not just have to mean “supplier vs. supplier.” If a company that is capable of making an assembly, component or finished product instead opts to have suppliers perform these value-added steps on their behalf rather than just supplying individual parts, ingredients or smaller components, then new forms of competition exist as well. To get the most out of these efforts – and decide the optimal means of designing supply chains – it becomes important to compete internal resources and capability against suppliers.

Sound odd? It’s happening today, in fact, in manufacturing environments where early adopters are harnessing the power of sourcing optimization technology to model supply chain cost inputs both internally and externally – and allowing suppliers to provide flexible quoting capabilities (i.e., they don’t have to bid a rigid specification) and then matching these capabilities up against a set internal constraints. In turn, this insight can also be fed back to suppliers to make them more competitive in the future (e.g., helping them understand whether it is a better business decision to invest in a new piece of expensive capital equipment that enables new processes or faster throughput in a centralized facility or whether it is worth localizing production with smaller equipment closer to customers).

Up-next in a “supply ecosystem” world: leveraging skills and knowledge across a network. 

Voices (2)

  1. Pierre:

    The make vs. buy analysis process that ‘competes’ (often just done as a benchmarking exercise) has been going on for quite some time at more advanced firms, and it’s something that is popular not just in supply chain, but also in corporate processes ripe for shared services, outsourcing, and offshoring. I had one client who routinely benchmarked their shared services against the best BPOs to see what they could outsource – but also to keep the shared services folks ‘on their toes’… and on their anxiety meds!

  2. Thomas Kase:

    Co-opetition – a concept coined by one of my SOM profs at Yale – Barry Nalebuff (together with Adam Brandenburger). He’s done a good deal in game theory, take a look:

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